2011 California Code
Corporations Code
TITLE 1. CORPORATIONS [100 - 14551]
CHAPTER 3. Directors and Management
Section 2702

(a) For the purposes of this section:

(1) Agent means any person who is or was a director, officer, employee, or other agent of the flexible purpose corporation, or is or was serving at the request of the flexible purpose corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the flexible purpose corporation or of another enterprise at the request of the predecessor corporation.

(2) Proceeding means any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative.

(3) Expenses includes without limitation attorneys fees and any expenses of establishing a right to indemnification under subdivision (b).

(b) Subject to the standards and restrictions, if any, set forth in its articles or bylaws, and subject to the limitations required by paragraph (11) of subdivision (a) of Section 2603, a flexible purpose corporation may indemnify and hold harmless any agent or any other person from and against any and all claims and demands whatsoever.

(c) Expenses incurred in defending any proceeding may be advanced by the flexible purpose corporation prior to the final disposition of the proceeding. The provisions of subdivision (a) of Section 315 do not apply to advances made pursuant to this subdivision.

(d) A flexible purpose corporation may purchase and maintain insurance on behalf of any of its agents against any liability asserted against or incurred by the agent in that capacity or arising out of the agent s status as an agent regardless of whether the flexible purpose corporation would have the power to indemnify the agent against that liability under this section. The fact that a flexible purpose corporation owns all or a portion of the shares of the company issuing a policy of insurance shall not render this subdivision inapplicable if either of the following conditions are satisfied:

(1) The insurance provided by this subdivision is limited as indemnification is required to be limited by paragraph (11) of subdivision (a) of Section 2603.

(2) (A) The company issuing the insurance policy is organized, licensed, and operated in a manner that complies with the insurance laws and regulations applicable to its jurisdiction of organization.

(B) The company issuing the policy provides procedures for processing claims that do not permit that company to be subject to the direct control of the flexible purpose corporation that purchased that policy.

(C) The policy issued provides for some manner of risk sharing between the issuer and purchaser of the policy, on one hand, and some unaffiliated person or persons, on the other, such as by providing for more than one unaffiliated owner of the company issuing the policy or by providing that a portion of the coverage furnished will be obtained from some unaffiliated insurer or reinsurer.

(e) This section does not apply to any proceeding against any trustee, investment manager, or other fiduciary of an employee benefit plan in that person s capacity as such, even though the person may also be an agent as defined in subdivision (a) of the employer flexible purpose corporation. A flexible purpose corporation shall have power to indemnify a trustee, investment manager, or other fiduciary to the extent permitted by subdivision (f) of Section 2605.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)